nation ready for WTO challenges?
international experts in Viet Nam spoke with Thoi bao Kinh te Viet Nam (Vietnam
Economic Times) about the opportunities and challenges of Viet Nam’s accession
to the World Trade Organisation (WTO).
Cheshier, UNDP economist
I would like to emphasise
that Viet Nam is well positioned for WTO entry, with globally competitive
exports in several industries and sectors. The terms of entry to WTO are
important and accession will transform Viet Nam.
However, Viet Nam’s
success after WTO entry depends on the ability of the country to respond and
adapt to challenges that it will face in the new situation. This will critically
depend on how government policies and domestic businesses meet these challenges.
Currently, Viet Nam is
very competitive in primary and low value-added goods: garments, footwear, crude
oil, and seafood to name a few. It is necessary to remain competitive in these
areas as they generate jobs and bring in foreign exchange.
production into higher value-added products is crucial for continued
development. This will become more difficult after WTO entry. To diversify
production, and increase and upgrade technology, government assistance is
required. It is very difficult for businesses to do this on their own.
This is not to say that
Viet Nam should stop producing and exporting garments, footwear and seafood.
While these areas are still important, for the nation to acquire the
middle-income country status emphasis should be given to higher value-added
products. This does not mean building spaceships or large-scale capital
intensive projects, but exporting canned fruit instead of unprocessed fruit. It
is about adding value, packaging, and quality. The little things that helps
products move up the value chain.
Viet Nam should play to
its strengths. It is well endowed with natural resources and is currently
exploiting them successfully but in a low value-added way. For example, you
produce rubber and exports it, but you have to also make rubber gloves and
export them too.
continued economic growth the country and the business community needs to
produce more high technology products. This will require a national technology
policy. However, the government does not have a clear technology policy even
though it consistently calls for improving technology levels in Vietnamese
firms. Some elements are in place but are poorly co-ordinated. Heavy emphasis
has been placed on foreign investment to bring technology to Viet Nam. The
issue, however, is in Vietnamese firms benefiting from these investments and
themselves adding value to their products.
An, Chairman, Viet Nam Garment and Textile Association
In the current
circumstance, each enterprise in the textile and garment sector should focus on
creating a trademark for their products depending on their markets, either
domestic or export markets. The domestic market, with a population of over 80
million, still psychologically prefer imported products. However, there has been
a turn around with many accepting exciting Vietnamese products and trademarks.
So enterprises should
invest in creating trademarks for their products in the domestic market. As for
foreign markets, most of the customers are aware of famous labels of foreign
producers and designers. It is very difficult for Vietnamese fashion trademarks
to penetrate these markets. There are a few Vietnamese companies and trademarks
like Phuong Dong Company’s F-House, Viet Tien Company’s Vee-Sendy and Viet
Fashion Company’s Nino Maxx, which have created an impression in the foreign
markets. But these are still initial steps.
We should not invest in
building trademarks in foreign countries at the moment. Rather, we should build
export enterprise trademarks focusing on product quality, on time and speedy
delivery and socially-committed production.
Vietnamese textile and
garment enterprises should build and popularise product trademarks in the
domestic market and enterprise trademarks in foreign markets.
Gainsborough, UNDP economist
It is clear that the
Vietnamese Government is being pushed extremely hard to make concessions across
a broad range of areas. Overall, it is expected that Viet Nam will enter the WTO
on tougher terms than other recent entrants, such as China and Cambodia. In
particular, this means reduced transition periods for implementing its WTO
commitments. In theory, this means Viet Nam’s economy will become more open
more quickly. This is good if greater openness is what you are looking for, but
the corollary is that this gives Vietnamese firms less time to adjust to
The key question is what
Viet Nam’s entry into the WTO will really mean both in terms of actual levels
of economic openness, and predictability of the business environment, as well as
the question of how well Vietnamese firms will cope with increased competition.
The reality is that while WTO membership offers Viet Nam the potential for
significant long-term gains, implementing the terms of the agreement cannot be
done without some pain.
Overall, WTO membership
will result in greater investment opportunities in Viet Nam as the service
sector is liberalised. Equal treatment for domestic and foreign investors is
gradually becoming a fact. As tariff barriers are lowered, the costs of some
imports are likely to fall.
This will assist
import-dependent manufacturing firms, seeking to become more competitive, to
reduce production costs. WTO membership will almost certainly have a positive,
knock-on consequences for economic growth. In theory, WTO membership ought to
offer Vietnamese exporters non-discriminatory access to the markets of fellow
However, in practice,
access is likely to be more restricted. That said, once inside the WTO, Viet Nam
will have access to WTO dispute-settlement mechanisms, which it currently does
The key risk associated
with WTO membership clearly relates to the ability of Vietnamese firms to cope
with increased competition. However, we are reasonably optimistic. There will be
bankruptcies, but the picture is more likely to be of individual firms
experiencing difficulties rather than whole sectors.
Forsberg, First Secretary, Embassy of Sweden in Viet Nam
Three-quarters of the WTO’s
members are developing countries. The main reason for developing countries to
join the WTO is the expected increase in exports from improved access to
international markets. Viet Nam is also hoping to boost foreign investments with
WTO membership. Furthermore, the benefits of the WTO dispute-settlement
mechanism are clear and a membership will give Viet Nam the possibility to
influence and shape trade rules.
In comparison to the
earlier rounds of negotiations, the developing countries are now far better
organised. Viet Nam has good potential to influence global trade policies if it
co-operates with other nations.
The recent agreement in
Hong Kong on phasing out export subsidies by 2013 shows the increased role that
developing countries play in WTO negotiations. It has a great symbolic value and
has boosted the perception of developing countries of what they can accomplish
within the WTO.
The factors that restrict
a country’s participation in world trade are basically the same as those that
lie behind its weak economic and social development. Such internal barriers are
physical, institutional and a result of developmental policies.
Viet Nam’s growth in the
past decade can largely be attributed to increased exports. WTO accession will
force Viet Nam to further open up its economy to international competition. This
will affect national developmental strategies.
By joining WTO, Viet Nam
can enjoy the benefits of economic integration. It is, however, necessary to
view this integration in a wider perspective and adopt policies ensuring that
the benefits are distributed fairly among the population.
A crucial challenge and
opportunity for Viet Nam in this work is to co-operate with other nations to
push for further liberalisation – for developed countries to reduce
protectionism and, regionally, between trading neighbours.
I am convinced that Viet
Nam can and will benefit from WTO membership. I am also convinced that Viet Nam
can strengthen the interests and negotiating position of developing countries in
WTO, thereby helping to promote global development and better conditions for the
poor in many countries. — VNS